Back to the drawing board: Greens respond to Alberta government’s carbon plan

After decades of government that neglected to address climate change in any serious way, it is a fine thing that the present government, newly elected in May, has taken the first steps toward putting rules in place that would see reduction of Alberta’s carbon and other GHG emissions. The policies announced by Premier Notley on November 22 do not achieve this goal – as explained below they fall way short of the mark – but they are better than the “joke” we had before and perhaps could provide the foundation for more meaningful future measures.

In critiquing the Alberta government’s so-called Climate Leadership Plan (CLP) we recognize that meeting the challenge of climate change is not easy for a province so heavily dependent upon fossil fuels. We appreciate too that this task was made even more difficult given the government’s need to have something on offer by way of a climate strategy to take to the COP21 negotiations in Paris.

So our criticisms are not directed at the government itself nor at the other people who have played key roles in developing the approach so far (such as members of the Climate Change Advisory Panel) but instead at the package of policies so far announced. For the fact is that these policies do nothing to reduce overall carbon emissions from Alberta. Instead, under these policies emissions from Alberta will continue to grow – actually increase in volume – until 2030 when they are predicted to stabilize at 270 MT annually which is above present levels.[1]

As many have observed,[2] these results mean Canada cannot meet its pre-COP21 stated goal of a 30% reduction from 2005 levels by 2030, which has been characterized by the new federal government as “a floor” below which we as a country cannot go. The Advisory Panel acknowledges that its recommendations taken as a whole are not consistent with keeping the world from exceeding the 2 degrees Celsius rise in temperature that many believe is imperative if chaos is to be averted: “our proposed policies will not place Alberta on a trajectory consistent with global 2 [degree] Celsius goals.”[3]

Put simply: The so-called Climate Leadership Plan recently announced by the government of Alberta torpedoes our country’s minimum goals for GHG reductions, rendering our national goals dead-in-the-water from the start.[4] From any kind of even remotely ethical perspective, this cannot stand.

2.0 Better than what we had before, but still way short of the mark

2.1 Getting off coal by 2030

It is very good that the province proposes to accelerate the de-commissioning of coal-fired electricity plants in the province in order to get completely off coal for electricity production by 2030.[5] This move should have been made many years ago: there are powerful arguments based on the harm that coal emissions do to our health and thus our public health-care budgets, without even getting to the role burning coal plays in producing climate-dangerous emissions.[6] But finally, with a new government in place, the step has been taken.

Nevertheless, the government’s move to de-couple electricity production in the province from the burning of coal does come with some problems.

2.1.1 Encouraging greater use of natural gas is not a good idea

By 2030 the provincial government aims to have 30% of electricity produced from renewable sources. Natural gas is expected to increase in use and to account for the bulk of the remaining 70 % by that date.

But this is not forward-thinking policy: the time for using natural gas as a so-called “transition fuel” – to wean us off more carbon-intensive fuels, such as coal and oil – has long since passed. There was a time many years ago when environmentalists were urging that natural gas be substituted for coal and oil because it is lower in carbon. But the climate change crisis has worsened since then – in part because fossil fuel dependent jurisdictions such as Alberta did so very little to reduce emissions – and now it is urgent that we go as directly as possible to renewables, such as wind, solar and geothermal, of which Alberta fortunately has an abundance.[7]

Perhaps the provincial government thought it had to throw this virtual bone to the natural gas industry, but the truth is that even the electricity utilities can see the writing on the wall: we are moving out of the fossil fuel age. In response to the Alberta government’s recent policy announcements, “Executives are also shying away from investing in the next cheapest form of electricity [after coal which is] natural gas-fired power, out of fear that future legislation would strand those assets as well. “I’d hate to be standing here in 10 years, having invested in 25-year, long-life, gas-fired assets and having the same conversation of ‘How do we cut their lives in half?’ ” Canadian Utilities Ltd. president and chief operating officer Siegfried Kiefer said.”[8]

The Climate Change Advisory panel proudly touts its package of policy recommendations in part for “leveraging the province’s abundant natural gas resources.”[9] But on the contrary, this is a flaw in the recommendations not a high point.

2.1.2 There’s a need to be clear on what are in fact benign alternatives: Large scale hydro is not

In addition to being very clear with everyone involved that meeting the climate crisis means getting off carbon as soon as possible and thus natural gas is not a desirable substitute for coal. the province should make clear sooner rather than later what is and what is not a benign alternative source of power. Already we have power utilities in the province trumpeting hydro as a viable alternative when it is clearly is not. Take for example recent remarks from Atco Ltd. as reported in The Globe and Mail:

Large-scale hydro power in northern Alberta will be an “enabler” to the province’s transition to more renewable electricity as the region shifts away from coal power, Atco Ltd.’s head of electricity said.

“Hydro power could make an important contribution to base-load power,” Wayne Stensby, a managing director said on Monday.[10]

Large-scale hydro – as opposed to run-of-the-river hydro – which depends on building a dam and flooding upstream is not low carbon. Far from it: vast amounts of methane, CO2 and other GHGs are released as a result of that flooding.[11] It is also very well known that damming rivers to produce electricity results in a host of other serious environmental problems.

2.1.3 Alberta should ban the mining and export of thermal coal

Finally, we note there is nothing in the government’s carbon plan that stops companies from exporting coal from Alberta to be burned elsewhere to produce electricity. This is wrong: coal should be viewed as Canadians have come to view asbestos: wrong to use it here, hence wrong to use it anywhere.

Alberta should ban the mining of thermal coal: we should leave it in the ground forever.[12] This would be an important move – both substantively and symbolically – and have little impact on the Alberta economy.

2.2 Pricing carbon

Alberta Greens strongly agree that carbon should be priced in order that consumers be encouraged to spend their money elsewhere: if carbon costs more, all other thing being equal, people will choose to consume less of it. But although the Premier spoke consistently of the plan to put in place a carbon “price” the new Alberta policy is much weaker on this score than might at first glance appear.

2.2.1 The province’s carbon pricing scheme seems to have some perverse results

Notley called it a carbon “price” but because the proposed system is so complicated, many who have not dug into the details have grabbed on to the notion it’s a carbon tax, but it is not. That it is not a carbon tax is not, taken alone, a catastrophe – there is more than one effective way to price carbon and imposing a carbon tax is but one.

But by not going for a carbon tax of the kind already in place in BC, an approach that has been widely praised, Alberta has foregone the benefits of the simplicity that attends a straight-forward carbon tax such as transparency and minimization of unintended consequences.

On the transparency front, the government’s new carbon plan is seriously wanting. Many people still don’t have much of a clue as to what it is all about, how it is going work and with what results. The public’s confusion is understandable because the plan as explained in the Climate Change Advisory Panel’s report is very complicated and much of the language used in the report is technical and thus opaque to most people.

As to unintended consequences, there are reasons to fear that the complexity of the carbon pricing system the province proposes to put in place may get in the way of achieving at least some of what it is supposed to achieve. For example, contrary to what you would have expected, consumers of electricity will not see an increased price of carbon on their utility bills and thus have no greater incentive to cut down on consumption of it. As the Climate Change Advisory Panel report states: “We expect negligible changes to electricity prices compared to business as usual for the next several years.”[13]

We realize there might be an argument to protect high electricity consuming industries from price rises, so as to protect jobs, but if so this should have been accomplished in another way because any effort to reduce carbon emissions that does not increase the price paid by ordinary electricity end-users is perverse.

The same problem is not expected in connection with natural gas and transportation fuels where price increases created by the new carbon pricing scheme are expected to flow through to consumers.

2.2.2 In any event the starting price put on carbon is too low

This criticism goes to the heart of the matter: the price set out in Alberta’s new policy is not high enough to make the kind of difference that is needed. The carbon price specified in the new plan is notionally $ 30 per tonne, but because of subsidies built into the system it will in many cases be effectively much lower. But even assuming a price of $ 30 per tonne, the price is too low. Serious estimates of what would be an appropriate price start at about $ 60 USD (at current exchange rates, about $ 80 Canadian) and go much higher into the $ 150 – 200 per tonne range.[14]

We understand that in order to keep Alberta’s fossil fuels competitive our province cannot go it alone with carbon prices at the upper end of this range right away but we also simply cannot ignore the fact that at $ 30 per tonne the new policy is unlikely to do any good at all. Indeed it looks like same old-same old: the price used by Alberta’s old carbon pricing system was so low (and so unevenly applied) that it has had virtually no impact on emissions which have continued to climb steeply.

The Pembina Institute’s recommendation on price of carbon seems much more: “We recommend a carbon price starting at $40 per tonne of CO2 emitted in 2016, with a schedule for increasing it by $10 per tonne annually over the first 10 years of the policy. This is generally the level of stringency necessary for Alberta to make a fair contribution to Canada’s international commitments.”[15]

As we note below in greater detail, if the government’s carbon plan is put in place as recently announced, Alberta’s GHG emissions will not be reduced from present levels. This really cannot be taken seriously as a strategy for meeting the climate change crisis. As many in the province are beginning to realize “A climate change plan that does not reduce emissions is a failure – a con job that sells our grandchildren down the river.”[16]

2.2.3 The government’s description of its carbon pricing plan as revenue neutral is deliberately misleading and thus regrettable

In a democracy government always has an obligation to be transparent with citizens and avoid unnecessary confusion. So it is unfortunate that the Alberta government went out of its way to insist that its plan was “revenue neutral” when it is nothing of the kind as that term is usually understood which is that all proceeds from the carbon pricing scheme will be used to lower other taxes. The Premier chose to give the term a new meaning: that money collected through the carbon plan would stay in Alberta. That would have been easy to state without using a term – revenue neutral – which the government’s proposed plan clearly is not.

To be clear: The Green Party of Alberta does not support a revenue neutral approach to carbon pricing. Government has subsidized the fossil fuel industries to the tune of billions over many years. Some of the proceeds of carbon pricing should go to levelling the energy playing field. But that is not the point here. The point is instead that the provincial government should always be as straightforward with Albertans as possible.

2.3 The plan allows for expansion of the oilsands

The most disturbing aspect of the government’s plan is that as opposed to resulting in reduction of emissions from the oilsands, it explicitly permits expansion of the oil sands (and touts this as a good thing) and allows a large increase in carbon emissions from them. The Climate Change Advisory Panel report states that emissions from the oilsands now stand at about 70 MT annually. The new policy caps emissions from the oilsands at 100 MT – allowing a 43% increase.

That this should be intended to pass as serious carbon policy is nearly unbelievable. If Alberta wants to be, and be seen to be, a jurisdiction that is serious about dealing responsibly with climate change, allowing our single greatest carbon emitter – the oilsands projects, taken collectively – to increase emissions by 43% is nothing short of ludicrous. This simply can’t be the right way to go.

But what is the right way to go? Well, that depends on whether Alberta is going to stick with this collective cap approach or go in another direction. But if it’s to be a collective cap then it has to be significantly lower.

The provincial government obviously wanted to keep oilsands companies happy and get the public relations benefit of having oilsands CEOs on the stage with the Premier and other cabinet ministers when the new policy was announced. But feel good politics and doing the right thing are unfortunately sometimes incompatible. We must understand that doing the right thing on carbon emissions will not please the oil and gas industry because it cannot please the oil and gas industry which exists to produce lots and lots of carbon. The right thing has to be aimed at reducing – not increasing – the scale of the oilsands and the emissions they produce.

If you have leaders of highly problematic companies cheering your plan, you should have grave doubts about its adequacy: the government’s plan fails utterly vis à vis the oilsands. And because, as oilsands emissions go, so goes Alberta’s overall emissions, the plan fails. Period.

2.3.1 Some of the oilsands provisions can be expected to have counter-productive results: Albertans will be paying to have some oil sands producers increase world carbon emissions.[17]

Under the new policy, the 25% of oilsands producers that are more carbon efficient than their peers (but still high-carbon compared to the carbon content of average world-wide oil) will receive more in subsidies than they pay in carbon tax per barrel of oil produced. This means they are given incentives to produce more of this high carbon content oil than had the plan not been put into effect. For these top 25% of producers, their cost of producing this high-carbon oil will be less than if Alberta had no carbon pricing system at all! And theoretically that means this oil will displace some less carbon-intensive oil thereby raising world emissions.

This perverse result is a consequence of the plan’s performance-bar being too parochial and as a result being set too low. The goal of carbon pricing is to reduce overall world emissions by internalizing the cost of emissions in the price of oil. By tying Alberta’s performance standard to an above average source of emissions – oilsands – the plan fails to have the price of oilsands oil reflect its above average emissions intensity.

This shortcoming could be addressed by tying the performance standard to something like world average emissions per barrel of oil produced. A sample performance standard could be something along the lines of “10% less than world average emissions per barrel of oil produced.”

The new plan seems geared to answering the question: “How can we make oil sands production less carbon intensive without affecting its price?” instead of “How do we contribute to emissions reductions by internalizing the carbon cost of oil sands production so that it fairly reflects its carbon intensity on world markets?”

2.4 On its face, the government’s carbon plan is a clear failure

In the Climate Change Advisory Panel’s own words: If this is all that Alberta is going to do on the carbon front, then our emissions are not reduced and Canada will not meet the targets it has set for itself in advance of COP21.

3.0 So we have a climate leadership plan that does not reduce Alberta’s carbon emissions: Really? How can it have come to this?

The challenge for Albertans is to change the way we think: the greatest hurdle we face in addressing the need to reduce our carbon emissions is not economic but psychological. It looks as if many of us are suffering from something like the Stockholm Syndrome where hostages become so insecure and fearful they come to identify with their captors’ interests.

Many Albertans have come to resent the oil and gas industry because they have seen their interests consistently sacrificed to it. This is especially true in rural Alberta where farmers and ranchers have been stomped on time and again by the oil and gas industry juggernaut. Many more Albertans seem to believe we cannot break free of the forces that threaten and limit our economy, and both our present and future well-being. But we could break free, if public policy did not cater to the oil and gas industry in inappropriate ways.[18]

We need to seize the moment the carbon crisis offers and use it to start building a different, low carbon future, one that is more democratic and socially just and much more de-centralized, especially in terms of electricity generation and storage terms.

While those whose thinking is still trapped inside the fossil fuel box may find it surprising, there are many Albertans ready, willing and able to take this challenge on. Many, especially many younger, Albertans do not want to have anything to do with the oil and gas industry. They seek their careers and futures elsewhere.

Consider these observations by blogger Susan-on-the Soapbox:

“The public, particularly the younger generation, is becoming less enamored with fossil fuels in general and the oilsands in particular.

“Jamil Jivani, the co-chair of the Future of Canada’s Oilsands, says younger workers are reluctant to work in the energy sector. They think it’s a dying industry. They’re not interested in squeezing more productivity or money out of old energy. Instead they’re looking for ‘completely new ways of making money, and new frontiers in the energy economy not yet embraced, or possibly even conceived.’

[The mention of nuclear in the above quote is unfortunate but the gist of these observations is important.]

The fundamental question for the development of policy in this area is this: Is the task of a climate plan to ensure the oil and gas industry can do business (pretty much) as usual in the face of climate change? Or is it to take steps to reduce carbon emissions from our province and do our part to avoid global climate change induced chaos?

If climate change is the challenge it seems undeniably to be, our task must be the latter and, if so, the government’s plan fails. The cap on oil sands emissions is, given the climate crisis, ludicrous, and it is no answer to say that until the rest of the world comes on board there is no point in Alberta doing more. The richer countries of the world, that is, those that can do more, must do more, must demonstrate leadership and take real steps towards a lower carbon future.

The government’s carbon plan doesn’t show leadership on any front, except in comparison with our previous carbon pricing system – the really lame “Specified Gas Emitters Regulation” – which Eric Reguly of The Globe and Mail and many others say: “could be charitably described as a joke.”[20]

4.0 Conclusion: Back to the drawing board – the plan is not good enough

It is clear from the government plan’s easy acceptance by the oil and gas industry that Alberta’s provincial government was too timid in its carbon reduction efforts. The object of the exercise has to be reducing GHG emissions from the province and this plan does not do that.

Greens want to see Alberta quickly move to significantly reducing our GHG emissions thereby allowing Alberta and Canada to become part of the climate crisis solution rather than remain a continuing part of the problem.

Notes:

[1] See page 10 of the Climate Change Advisory Panel’s report. The point is acknowledged at other places in the report as well. See for example, page 40.

[2] See for example, Eric Reguly “Alberta carbon plan is deceptive,” The Globe and Mail, November 28, 2015.

[3] Report, p. 41. Since the Climate Change Advisory Panel’s report was issued and the province announced its plan, the Canadian federal government has announced at the COP21 negotiations in Paris that it wants to see the target be lowered to 1.5 degrees. If that goal were to be adopted in the agreement to come out of Paris, Alberta’s recent announcements would be that much more inadequate.

[4] This is because Alberta is responsible for such a high percentage (37%) of Canada’s GHG emissions.

[5] Very great thanks to the Albertans who worked so hard to advance this issue.

[18] Talk about inappropriate, catch this: under the proposed plan emissions from oil and gas in the province are expected to increase by 2030 to 55% over 2005 levels. See page 8 of the Climate Change Advisory Panel’s report.

Related

Comments 2

That’s telling it like it is, Janet! This brilliant analysis of our Alberta “Climate Leadership Plan” feels like a Christmas present to all of us who want a plan that makes a real difference. The “inconvenient truth” begs the question of all of us as well as the government: will we act as the truth requires or just for our own convenience? It’s a proud moment for the Green Party of Alberta to let everyone know what are the critical flaws in Alberta’s CLP. We must move on to what should be the REAL plan – figuring out how to ramp up renewables so effectively that the timid CLP can be surpassed.

Janet, thanks for displaying the obvious. The Notley regime only slowed the digging of the hole we are in. We are still digging. Filling the hole by shoveling back needs to start immediately. The grandchildren can’t shovel yet. That is our job.